1 in 10: U.S. Mortgage Delinquencies Reach a Record High — Going UP?

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Editor’s Note: While the media, Wall Street and government sources try to placate us, there are inescapable truths right now and inescapable consequences right around the corner. Other than people who own their home outright or who are relatively close to that point, nearly every homeowner in America has several problems: (1) title is clouded if they refinanced or purchased a home in the last 10 years unless their loan product was local and thus not securitized and (2) they are hopelessly lost in debt that was fabricated by the sellers of Wall Street loan products because whether they know it or not, their home is worth less right now than what they owe, especially after you take into consideration the costs of sale (brokerage commissions etc.) and costs of closing.

The future is even more bleak as prices continue to fall under pressure from an increasing number of homes in inventory. If we stopped building now it would probably take close to 10 years to sell all the houses that are actually in the pipeline. Many of them are not counted right now as “inventory” but they are there nonetheless. Prices will fall under even more pressure as an increasing number of people, their real income decreasing for the last 30 years, simply pick up sticks and leave the keys on the counter. They can rent or even own a home for far less than the payments being demanded on their existing home. In many cases it is a simple calculation of whether to take a “hit” on their FICO score or try to pay hundreds of thousands of dollars they might never recover. As stated, they can’t pay it anyway because median income is dropping. In other words inventory will increase just from voluntary abandonments. Just staying in the house a few months during the process of foreclosure and eviction can put some money back on the table for the homeowner who is already strapped whether payments are being made or not.

Housing prices are tied to median income more than anything else. Unemployment, underemployment, and decreasing wages —actual dollars as well as relative purchasing power is lowering REAL median income every month. Those FOR SALE signs and the prices being asked are not real. Sure some buyers might bite, but most are going to wait until there is some indication that we have hit bottom. So prices will come under increasing pressure from lower median income and an absence of buyers. Using Schiller’s inflation adjusted index, it is obvious when we are still 15%-25% from the bottom using today’s “asking” prices as the baseline.

So that house that the seller thinks is “worth” $300,000 because they bought it for $450,000 is actually only going to fetch perhaps $250,000, less expenses. In all probability the Seller does not have the resources to make up the difference between the actual net selling price or proceeds and the alleged amount due (ignoring the fact that the amount due has probably been paid several times over to the investors who advanced the money that went mostly into the pockets of the Wall Street masters of the universe and partly into the funding of the loan). The only options are short-sale with permission from an entity that does not have any authority to approve it, loan modification with principal reduction with the same authority problem, attack the pretender lenders using the tools provided here, or walk from the house and forget about the whole thing. It doesn’t take a rocket scientist to figure out what many people will elect out of those choices.
November 20, 2009

U.S. Mortgage Delinquencies Reach a Record High

The number of people at least one month behind on their house payments rose to a record in the third quarter, the Mortgage Bankers Association said Thursday.

Nearly 10 in 100 homeowners are delinquent, according to the association’s data, up from about seven out of 100 in the third quarter of 2008.

These numbers do not include those who are actually in foreclosure, a figure that also rose sharply. The combined percentage of those in foreclosure as well as delinquent is 14.41 percent, or about one in seven of mortgage holders.

“Despite the recession ending in mid-summer, the decline in mortgage performance continues. Job losses continue to increase and drive up delinquencies and foreclosures because mortgages are paid with paychecks, not percentage point increases in G.D.P.,” Jay Brinkmann, the association’s chief economist, said in a statement.

The data indicates that borrowers in trouble are no longer just those who took out subprime loans. High-quality prime fixed-rate mortgages now represent the largest share of new foreclosures.

The survey is based on a sample of more than 44 million mortgage loans serviced by mortgage companies, commercial banks, thrifts, credit unions and others. The association’s records date back to 1972.

8 Responses

  1. […] « 1 in 10: U.S. Mortgage Delinquencies Reach a Record High — Going UP? […]

  2. Got Well’s Fargo to commit purjury.

  3. I was able to get Well’s Fargo’s primary witness to commit perjury in my adversarial evidentiary hearing case in District 10 in Colorado. It was their Assistant MDC from San Antonio, Texas. We informed the
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  5. […] 1-in-10-u-s-mortgage-delinquencies-reach-a-record-high-going-up The Emperor is still strutting around as though he was fully clothed in the best silk, color and design. Wall Street is still the darling of government and a whole lot of other people, even if it was a little bad these past few years. We’ve been through the part where the swindler’s came to town, where the government officials ashamed of their apparent blindness and ignorance raved about the new derivative innovations, and the parade of foreclosures based upon invisible clothes. But we have not arrived at the part in the story where the little child yells out that the old fool has no clothes on. And we still don’t hear everyone laughing at wall Street and sending them home to lick their own wounds instead of inflicting it on everyone else. […]

  6. Good Article, I like it, Thank you for sharing! Everything You Need To Recognize Most Mortgages, home loans and Real Estate made easy. Soft to realise articles and advice make your choice much better to make.

  7. Here are some definitions in the default file. Notice Chain of Title and Marketable Title (of course these only apply to GMAC-RFC and this particular file):

    Approval Date
    The Approval Date is the projected date when the appropriate levels of approval have been attained. In the case of a Short Payoff, a RFC Asset Manager, a Mortgage Insurance Company and/or an Investor approval is needed. If the loan is in Re-payment Plan, the approval is delegated to the Servicer for the majority of our loans.

    Bankruptcy
    Court proceedings to relieve the debts of an individual or business unable to pay its creditors. Bankrupcy may be declared under one of several chapters of the federal bankruptcy code: Chapter 7, which covers liquidation of individual or business assets; Chapter 11, which covers reorganization of bankrupt businesses; Chapter 12, which covers certain farm bankruptcies; Chapter 13, which covers workouts of debts by individuals.

    Broker’s Price Opinion
    An opinion of Value on a property provided by a real estate broker based on comparable sales data of other properties located within the same area of that property.

    Business Day
    Any day other than a Saturday, Sunday or any of the holidays upon which GMAC-RFC is officially closed for business.

    Certificate of Sale
    The document generally given to the purchaser at a tax foreclosure sale. A certificate of sale does not convey title; normally it is an instrument certifying that the holder received title to the property after the redemption period passed and that the holder paid the property taxes for that interim period.

    Chain of Title
    The succession of conveyances, from some accepted starting point, whereby the present holder of real property derives title.

    Deed-In-Lieu
    A deed given by a borrower/mortgagor to a lender/mortgagee to satisfy a debt or the terms of the mortgage. This is a way for the borrower/mortgagor to avoid foreclosure. This is ordinarily preferred to foreclosure especially when the Mortgaged Premises are located in a region that has long redemption or foreclosure completion periods.

    Default
    The nonperformance of a duty, whether arising under a contract or otherwise; failure to meet an obligation when due.

    Deficiency Judgement
    A court order against the borrower to pay the balance owned on a loan if the foreclosure sale proceeds from the sale of the security are insufficient to payoff the loan.

    Delinquency
    Delinquency occurs when all or part of the Borrower’s monthly installment of principal, interest, and, where applicable, Escrow/Impound is unpaid after the due date. A Delinquency that remains uncured as of the close of business of the last Business Day before the next due date is considered a one-payment or 30-day Delinquency.

    Due Date
    The date the Borrower’s monthly installment of principal, interest, and , where applicable, escrow is due as stated in the Note.

    Escrow Completion Date
    The “Escrow Completion Date” is the actual date that the escrow closed for the sale of the REO property.

    Eviction Start Date
    The date on which the legal action was commenced to evict the occupants of the foreclosure property so that possession, renovation (as applicable), management and marketing of the REO can occur.

    Eviction Completed Date
    The date on which the legal action was successfully completed to evict the occupants of the foreclosed property so that possession, renovation (as applicable), management and marketing of the REO can occur.

    First Legal Action
    The First Legal Action defined as the recordation of the Notice of Default in a non-judicial proceeding, or filing of the Complaint, or an equivalent operation of law, in judicial proceedings.

    Final Accounting Date
    The “Final Accounting Date” is the date that the REO file is reconciled with all of the Servicing advances, MI collections and the gain/loss to the investor is established. The funds are reported in the next distribution cycle.

    Foreclosure
    A legal procedure whereby property used as security for a debt is sold to satisfy the debt in the event of default in payment of the mortgage note or default of other terms in the mortgage document. The foreclosure procedure brings the rights of all participants.

    Judgement
    The formal decision of a court upon the respective rights and claims of the parties to an action or suit. After a judgment has been entered and recorded with the county recorder, it usually becomes a general lien on the property of the defendant.

    Loan Modifications
    A Loan Modification occurs when a change is made to one or more of the original terms of a Mortgage Note.

    Loss Mitigation Workouts
    As an alternative to foreclosure, if the Servicer has determined that all collection efforts have failed and all appropriate relief measures have been taken, one of the following workout options may be selected: Pre-foreclosure sale/short payoff, Deed-in-lieu of foreclosure, Loan modifications, and Write-off (applicable for mortgages with low unpaid principal balance and second mortgage liquidation).

    Marketable Title
    Good or clear title, reasonably free from the risk of litigation over possible defects.

    Open Date
    The Open Date is the date that GMAC-RFC received the loss mitigation alternative data from the Servicer and opened the loss mitigation segment to track the loan’s performance progress.

    Original List Date
    The date the initial listing agreement placed the REO property on the market.

    Original List Amount
    The value of the property on the original list date.

    Paid Off Indicator
    A ‘Y” (Yes) or “N” (No) indicating if the loan’s Unpaid Principal Balance has been paid off. The Unpaid Principal Balance field typically should be blank.

    Pre-Foreclosure Sale (Short Payoff)
    An accepted offer to purchase the property for less than the total indebtedness (unpaid principal balance, accrued interest, and any expenses incurred).

    Real Estate Owned (REO)
    Real property for which GMAC-RFC, or its investor(s), has acquired marketable title as the result of a completed foreclosure, deed-in-lieu of foreclosure, or other action.

    Redemption
    The right of a defaulted property owner to recover his or her property by curing the default.

    Redemption Period
    A period of time established by state law during which borrowers/mortgagors has the right to redeem back their foreclosure real estate from a foreclosure or tax sale by paying the balance owned on their delinquent mortgages, plus interest and fees.

    Repayment Plan
    A repayment plan gives a Borrower a definite period, up to 12 months, in which to reinstate the Loan by immediately making, and continuing to make, payments in excess of the regular monthly installment.

    Scheduled Principal Balance
    At any time and with respect to any Loan, the original principal amount of such Loan at the time it was purchased by GMAC-RFC less that portion of any cash payments received by GMAC-RFC from the primary Servicer for such Loan that is to be applied toward the reduction of the outstanding principal balance of the Loan.

    Short Sale
    Subject property was sold less than the outstanding debt

    Status field
    The “Status” field reflects the contractual delinquency status of the loan. The numeric value status was translated into text for this report. There are six stages reported:
    0 = Current
    1 = 30 Day Delinquent
    2 = 60 Day Delinquent
    3 = 90+ Day Delinquent
    4 = Foreclosure
    5 = Real Estate Owned Status

    Write-offs
    A write-off designates a Mortgage as uncollectable. It is considered the best option when the market Value of the property does not support the cost to acquire title and market the property.

    Value
    The power of a good or service to command other goods in exchange for the present worth of future rights to its income or amenities.

    Thanks,
    Dan Edstrom
    dmedstrom@hotmail.com

  8. Found the default file from the master servicer for my loan. I listed the value as $250,000 in my bankruptcy filing. A drive-by BPO in July they estimated $230,000.

    POOL ID = 0040198
    SERIES = RASC 2005-EMX4 ARM
    RFC LOAN ID = 10019116
    PROPERTY CITY = ***********
    STATE = CA
    ZIP = 95***-0000
    CURRENT PRINCIPAL BALANCE = $485,631.10
    PAID OFF INDICATOR = N
    1ST PAYMENT DATE = 11/1/2005
    NEXT PAYMENT DUE = 7/1/2008
    STATUS = Foreclosure
    APPRAISED VALUE = $230,000
    APPRAISAL TYPE = BPO Exterior
    APPRAISAL DATE = 7/10/2009
    BK = Active
    BK COUNT = 2
    BK CHAPTER = 7
    BK PETITION FILED DATE = 8/6/2009
    BK RESOLUTION DATE =
    LOSS MITIGATION ACTIVE =

    Thanks,
    Dan Edstrom
    dmedstrom@hotmail.com

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